Daily Market Outlook, November 16, 2023
Munnelly’s Market Commentary…
Asia - .stocks experienced mixed performance, influenced by the choppy trading in the U.S. and a waning of recent data-driven momentum. The Nikkei 225, despite better-than-expected exports and machinery orders, saw a 0.1% decline as investors opted to book profits. in Hong Kong, the Hang Seng fell by 1.4%, and the Shanghai Composite dipped by 1.5%. These declines were attributed to mixed tech earnings and the aftermath of the Biden-Xi meeting. The rhetoric from the meeting was described as constructive and productive, with both leaders agreeing to restart cooperation on counter-narcotics and establish forums for military-to-military contact. However, reports also noted that President Biden referred to President Xi as a dictator and raised concerns about China's human rights abuses in Xinjiang, Tibet, and Hong Kong. Biden emphasised that the U.S. would take action to prevent its technology from being used to undermine its security. The nuanced outcomes of the Biden-Xi meeting, coupled with tech earnings and global economic considerations, contributed to the mixed performance in the Asia-Pacific markets.
Europe - This morning, there are no major data releases in the UK or Eurozone. Sterling markets are expected to continue digesting yesterday's lower-than-expected Consumer Price Index (CPI) inflation data, influenced by the soft U.S. CPI figures the day before. Financial markets are currently anticipating first rate cuts by the Bank of England, the Federal Reserve, and the European Central Bank around the middle of next year. It remains to be seen whether there will be any pushback against these expectations, as central banks have not definitively ruled out further tightening. Many policymakers have previously emphasised that it is too early to consider rate cuts. Several central bank rate-setters are scheduled to appear today. However, many, including ECB President Lagarde and the Bank of England's Ramsden, are speaking at a financial stability conference, and it is uncertain if they will discuss near-term prospects for monetary policy.
US - Stateside, In terms of data, US industrial production is expected to have declined in October, and the Philadelphia Fed manufacturing survey is forecasted to have remained weak in November. Yesterday's retail sales data also showed a slowdown in spending, indicating a moderation in growth in Q4 after a strong third quarter. The Federal Reserve speakers scheduled for today include Fed's Williams, Waller, Barr, Cook, and Mester. Their speeches may provide insights into the Fed's current stance on monetary policy, economic conditions, and their outlook for the future. Investors and analysts will closely watch these speeches for any hints or signals about potential policy adjustments by the central bank in response to the changing economic landscape.
FX Positioning & Sentiment
The demand for USD put options increased after the October NFP data and the U.S. CPI miss. Risk reversals showed a preference for USD puts over calls against currencies such as EUR, GBP, and AUD. USD/CNH 1-month expiry risk reversals flipped to USD puts from calls, indicating fear of USD/CNH losses. USD/JPY option flows were dominated by sellers. AUD/USD realised volatility outperformed implied volatility and maintained a long volatility bias. G10 FX is expected to stay within familiar Q4 ranges, limiting any potential FX implied volatility gains.
CFTC Data As Of 10-11-23
CAD bearish -3,555
EUR bullish 11,287
GBP bearish -1,547
AUD bearish decreasing -4,760
NZD bearish -747
MXN bullish 867
CHF bearish -2,047
JPY bearish increasing -8,558
Gold bullish increasing 32,422
USD bullish decreasing 9,060 (CFTC)
FX Options Expiries For 10am New York Cut
(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.0800 (1.8BLN), 1.0825 (411M), 1.0850-55 (1.9BLN)
USD/CHF: 0.8820 (233M), 0.8920 (304M), 0.8980-85 (608M)
GBP/USD: 1.2285 (253M), 1.2300 (341M), 1.2360 (546M), 1.2425-40 (1BLN)
EUR/GBP: 0.8670-75 (513M)
AUD/USD: 0.6450-55 (1.2BLN), 0.6460 (1.8BLN), 0.6465-75 (1.2BLN)
0.6475 (427M), 0.6500-05 (958M)
NZD/USD: 0.5800 (1.7BLN), 0.5950 (350M), 0.6025 (1.8BLN)
USD/CAD: 1.3700 (367M), 1.3750 (1.4BLN).
USD/JPY: 150.00 (3.7BLN), 150.95-151.05 (1.1BLN), 151.20-25 (1.4BLN)
151.50 (624M), 152.00 (578M)
Overnight Newswire Updates of Note
US Futures Little Changed, Hopes To Build On November Rally
Asia Stocks Inch Lower As Investors Digest Biden-Xi Meeting
Fed’s Daly: Warn Against Calling Time On Hike Cycle Too Soon
Fed’s Barkin: More Needs To Be Done Over Affordable Housing
US Senate Vote To Avert Shutdown, Omitting Israel-Ukraine Aid
Biden Adviser Says Sanctions Will Bring Down Iran Oil Exports
Biden, Xi Strike Deal On Military Communications, Fentanyl, AI
Biden Again Calls Xi A Dictator, Showing Limits Of Cooperation
China Housing Woes Worsen As Prices Fall Most In Eight Years
Japan Exports Decelerate, Keep Pressure On Fragile Economy
Australia Unemployment Rate Rises Even As Job Gains Persist
UK’s Hunt Plans To Slash Inheritance Tax At Autumn Statement
Spain Debate New Sanchez Term Amid Amnesty Offer Protests
Cisco Shares Fall As Corporate Spending Slump Hurt Forecasts
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
Technical & Trade Views
SP500 Bias: Bullish Above Bearish Below 4470
Below 4400 opens 4370
Primary support 4420
Primary objective is 4540
20 Day VWAP bullish, 5 Day VWAP bullish
EURUSD Bias: Bullish Above Bearish Below 1.08
Below 1.0650 opens 1.0550
Primary support 1.0650
Primary objective is 1.0964
20 Day VWAP bullish, 5 Day VWAP bullish
GBPUSD Bias: Bullish Above Bearish Below 1.2430
Below 1.24 opens 1.2350
Primary support is 1.2185
Primary objective 1.2570
20 Day VWAP bearish, 5 Day VWAP bullish
USDJPY Bias: Bullish Above Bearish Below 150
Below 149 opens 148.30
Primary support 147.30
Primary objective is 152.50
20 Day VWAP bullish, 5 Day VWAP bullish
AUDUSD Bias: Bullish Above Bearish Below .6450
Below .6290 opens .6250
Primary support .6330
Primary objective is .6590
20 Day VWAP bearish, 5 Day VWAP bullish
BTCUSD Bias: Bullish Above Bearish below 34000
Below 33600 opens 32400
Primary support is 30000
Primary objective is 37000
20 Day VWAP bullish, 5 Day VWAP bullish
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Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!